1 Official news, documents, and policies reflect no change in Xi’s paramount position despite ‘losing power’ rumors
May 12
The State Council Information Office published a white paper titled, “China’s National Security in the New Era” (新時代的中國國家安全). The document states that adopting a holistic approach to national security is an important component of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and Xi Jinping Thought represents a significant theoretical contribution from contemporary China to the world.
May 15
1. The State Council convened a meeting to advance efforts in strengthening domestic economic circulation. Per state media reports, PRC premier Li Qiang said at the meeting that officials should thoroughly implement “Xi Jinping Economic Thought,” follow the decisions and deployments of Party Central, develop a deep and accurate understanding of the current situation, and make the strengthening of domestic circulation the strategic foundation for development.
2. The General Office of the CCP and the State Council issued an opinion on continuously advancing urban renewal initiatives (關於持續推進城市更新行動的意見). The Opinion’s section on overall requirements stressed the importance of adhering to Xi Jinping Thought and fully implementing the guiding principles of the 20th Party Congress, as well as the Second and Third Plenums of the 20th Central Committee. The Opinion also called for the full implementation of General Secretary Xi Jinping’s important statements on urban development.
3. The Central Party School held the opening ceremony for the second group of advanced training classes for the 2025 spring semester.
In a speech, Central Party School president Chen Xi emphasized the importance of thoroughly studying and implementing Xi Jinping Thought and earnestly understanding General Secretary Xi’s important discourses on strengthening Party conduct and discipline.
Chen also urged leading cadres to deeply grasp the decisive significance of the “Two Establishes” and firmly uphold the “Two Safeguards,” deepen their understanding of these important discourses, and promote the thorough and practical implementation of Party Central’s eight-point regulation spirit.
May 16
Qiushi, the CCP Central Committee ideological journal, published an important article by Xi Jinping titled, “Remain Persistent in Implementing the Spirit of the Eight-point Regulation, Use Fine Party Conduct to Lead Social and Civic Morality” (録而不捨落實中央八項規定精神，以優良黨風引領社風民風).
The article, which was a compilation of Xi’s key remarks made between December 2012 and March 2025, stressed that the Party’s conduct is a matter of life and death for a ruling party. Also, the eight-point regulation is strict self-discipline, reflecting the Party’s commitment to self-governance and strict management and how the improvement of work conduct starts with the CCP Politburo. The article added that issues of conduct are, at the core, issues of Party character, and the effort to improve Party conduct is an ongoing process with no end point.
Background
Since the conclusion of the Third Plenum of the 20th Central Committee in July 2024, there have been endless rumors and speculation in overseas Chinese-language circles about how Xi Jinping is “losing power.” We have been pointing out the problems with those rumors and warning about the negative impact of the “Xi losing power” narrative in past newsletters (see here and here for examples).
Our take
In communist regimes, political propaganda and protocol afforded to top leaders are key indicators of their power and political stability. Despite the breathless rumors and speculation that Xi Jinping has “lost power,” recent state media reports and official documents — spanning economic policy, leading cadre training, anti-corruption efforts, and national security — indicate that Xi’s paramount position in the CCP regime has not been shaken.
1. The CCP authorities continue to call for using “Xi Jinping Thought” to guide the PRC’s economic policies. For instance, Li Qiang urged officials to implement “Xi Jinping Thought” in advancing efforts in strengthening domestic economic circulation in the State Council meeting on May 15, while the General Office of the CCP and the State Council called for urban development to be aligned with Xi’s key discourses on the subject.
The aforementioned directives affirm that Xi’s political theories remain the cornerstone of the regime’s policies and underscore his paramount position in the Party.
2. The Central Party School, which trains mid- to senior-ranking officials, is still required to “thoroughly study and implement” Xi Jinping Thought and “earnestly understand” Xi’s important discourses on strengthening Party conduct and discipline. This intra-Party political indoctrination is designed to inculcate absolute loyalty to the “Xi core” and make subversive all “improper discussions” of Party Central’s policies.
Notably, Central Party School president Chen Xi is advancing Beijing’s “eight-point regulation” campaign, which serves a number of key purposes for the Xi leadership aside from strengthening Party discipline and adherence to ideological orthodoxy. Similarly, the Qiushi article on the “eight-point regulation” re-emphasizes Xi Jinping’s trademark campaign and tightly links the anti-corruption effort with allegiance to Xi.
3. The State Council’s white paper on “national security in the new era” essentially elevates Xi Jinping’s views and approach to national security to a “significant theoretical contribution.” The document also uses the grand narrative of national security to further entrench Xi’s ideological and policy dominance in the regime and solidify his “core” status in the CCP.
2 PRC’s influence over the Middle East likely to weaken as Trump makes inroads
Trump’s Middle East deals
From May 13 to May 16, President Donald Trump visited Saudi Arabia, Qatar, and the United Arab Emirates in his first major international trip of his second term. He made several key deals during the trip, including:
- Saudi Arabia pledged $600 billion in investments in the United States and a $142 billion defense sales agreement.
- Qatar and the U.S. announced economic deals exceeding $243.5 billion, including a $96 billion agreement for Qatar to acquire up to 210 American-made Boeing 787 Dreamliner and 777X aircraft powered by GE Aerospace engines.
- The UAE and the U.S. announced over $200 billion in commercial deals, including plans for the UAE to invest $1.4 trillion over the next decade in U.S. sectors such as AI infrastructure, semiconductors, energy, quantum computing, biotechnology, and manufacturing.
Trump’s Riyadh speech
On May 13, Trump delivered a major address in Riyadh, Saudi Arabia. Some notable points in his speech include:
- “Exactly eight years ago this month, I stood in this very room and looked forward to a future in which the nations of this region would drive out the forces of terrorism and extremism … and take your place among the proudest, most prosperous, most successful nations anywhere in the world as leaders of a modern and rising Middle East.”
- “Before our eyes, a new generation of leaders is transcending the ancient conflicts and tired divisions of the past, and forging a future where the Middle East is defined by commerce, not chaos; where it exports technology, not terrorism; and where people of different nations, religions, and creeds are building cities together — not bombing each other out of existence.”
- “This great transformation has not come from Western interventionists … giving you lectures on how to live or how to govern your own affairs. No, the gleaming marvels of Riyadh and Abu Dhabi were not created by the so-called ‘nation-builders,’ ‘neo-cons,’ or ‘liberal non-profits,’ like those who spent trillions failing to develop Kabul and Baghdad, so many other cities. Instead, the birth of a modern Middle East has been brought about by the people of the region themselves … developing your own sovereign countries, pursuing your own unique visions, and charting your own destinies.
- “In the end, the so-called ‘nation-builders’ wrecked far more nations than they built — and the interventionists were intervening in complex societies that they did not even understand themselves.”
- “I am here today not merely to condemn the past chaos of Iran’s leaders, but to offer them a new path and a much better path toward a far better and more hopeful future.”
- “My preference will always be for peace and partnership, whenever those outcomes can be achieved. Always.”
- “In recent years, far too many American presidents have been afflicted with the notion that it’s our job to look into the souls of foreign leaders and use U.S. policy to dispense justice for their sins … I believe it is God’s job to sit in judgement — my job [is] to defend America and to promote the fundamental interests of stability, prosperity, and peace.”
Countering China?
In an interview with Fox News’ “Special Report” host Bret Baier on May 16, Trump said that the Gulf nations were being “coaxed very strongly by China” and “that solves China’s fuel problems forever.”
Trump added, “It wasn’t their preference, but they were on their way.” He also said the U.S. is now “closer to them than ever before,” referring to Saudi Arabia, Qatar, and the UAE.
US nuclear deal with Iran?
Speaking at a business roundtable in the Qatari capital Doha on May 15, President Trump said that Iran “can’t have a nuclear weapon.” He also suggested that negotiators are “getting very close to maybe doing a deal.” Trump said, “Iran has sort of agreed to the terms: They’re not going to make, I call it, in a friendly way, nuclear dust. We’re not going to be making any nuclear dust in Iran.”
A day earlier, Ali Shamkhani, a top political, military, and nuclear adviser to Iranian Supreme Leader Ayatollah Ali Khamenei, told NBC News that Iran is willing to sign a nuclear deal with the U.S. under certain conditions. In exchange for the immediate lifting of all U.S. economic sanctions, Iran is willing to commit to never making nuclear weapons, doing away with its stockpiles of highly enriched uranium which can be weaponized, agree to enrich uranium only to the lower levels required for civilian use, and allow international inspectors to supervise the process.
Our take
1. The Middle East is vital to the PRC’s energy and geopolitical interests. Therefore, the CCP has been gradually expanding its influence in the region over the past decade plus. Some notable developments include:
2015
- The PRC announces the inclusion of the Middle East in its Belt and Road Initiative framework.
- Beijing signs multiple infrastructure and energy cooperation agreements with Egypt and Iran.
2016
- Xi Jinping visits Saudi Arabia, Egypt, and Iran, his first state visit to the region in over a decade. The PRC then upgrades ties with all three countries to comprehensive strategic partnerships.
2017
- The PRC launched the Digital Silk Road, with Huawei expanding 4G and 5G projects in Gulf nations.
- The PRC and Saudi Arabia agree on major energy and technology cooperation projects.
2018
- The China-Arab States Cooperation Forum strengthens political and economic coordination.
- The PRC constructs key infrastructure projects in Iraq and Egypt, including power plants and railroads.
2019
- The PRC becomes the largest trading partner of many Middle Eastern countries, including Iran and the UAE.
- The PRC holds joint naval drills with Russia and Iran in the Gulf of Oman.
2020
- Amid the COVID-19 pandemic, the PRC maintained its economic presence in the Middle East and increased medical diplomacy to Middle Eastern countries.
- The PRC increased arms sales, including drones to Saudi Arabia and the UAE.
2021
- The PRC and Iran sign a 25-year comprehensive cooperation agreement.
- Huawei and other Chinese tech firms expand smart city and surveillance infrastructure in Gulf states.
2022
- The first China-Arab States Summit was held in Riyadh.
- The PRC promotes the yuan for oil trade, with early-stage talks of yuan-denominated oil contracts with Gulf countries.
2023
- Beijing brokers historic Saudi-Iran rapprochement, crafting an image for itself as a neutral peace broker.
- The PRC holds more joint military drills with Iran and Russia.
2024
- The PRC expands cultural exchanges, including more Confucius Institutes, Arabic-language broadcasting, and scholarship programs.
- Several Gulf states deepen their tech partnerships with China despite U.S. pressure.
2025
- The PRC finalizes several long-term energy and logistics deals with Saudi Arabia, Iraq, and the UAE.
- Chinese companies operate key port and industrial zone projects across the region.
- Beijing positions itself as a pillar of multipolar diplomacy in the Middle East, balancing ties with Israel, Iran, the Gulf Cooperation Council, and others.
The CCP was afforded opportunities to make more inroads when relations between the U.S. and the Gulf states weakened under the Biden administration:
- The Biden administration’s embrace of green energy and easing reliance on fossil fuels saw some Gulf countries draw closer to China to secure their markets. For instance, Xi Jinping signed 34 energy and investment agreements worth $30 billion with Saudi Arabia when he visited the country in December 2022. Bilateral trade would surge from $67.13 billion in 2020 to $107.53 billion in 2024, with China consistently ranking as Saudi Arabia’s top trading partner.
- The Biden administration took measures that threatened the security of Middle Eastern allies like Saudi Arabia and the UAE, including relaxing sanctions on Iran and fueling regional terrorism through indirectly funding Iran’s proxies (e.g. Houthi rebels, Hezbollah, etc.). This eroded trust between the U.S. and the Gulf states, making them more susceptible to Beijing’s advances.
- The chaotic U.S. withdrawal from Afghanistan in 2021, which enabled the Taliban’s swift takeover, heightened fears among Middle East allies that the U.S. might abandon them in future crises.
- The PRC appeared to capitalize on this by offering economic aid to Afghanistan and engaging with the Taliban, indirectly shaping regional strategic calculations.
- The Biden administration strained relations with Saudi Arabia early on by confronting them over the Khashoggi murder and restricting military support for Saudi Arabia’s Yemen campaign by halting offensive weapon sales (this was reversed in August 2024).
2. President Trump’s Riyadh speech and various Middle East deals, including those signed (with Saudi Arabia, Qatar, and the UAE) and in progress (with Iran), will improve relations between the U.S. and the Gulf nations, as well as erode Beijing’s geopolitical gains in the region.
The investment and economic partnerships forged with Saudi Arabia, Qatar, and the UAE during Trump’s Middle East tour will likely realign these nations more closely with U.S. interests. Those countries share strategic concerns with the U.S. on Iran and are reliant on American arms and security guarantees. While those Gulf states will maintain economic ties with the PRC and not entirely abandon China ties in geopolitical balancing, they will move closer into the U.S. orbit as national security priorities take precedence over economic considerations. As Trump’s tariff policies progressively erode China’s manufacturing global footprint, these nations’ economic reliance on Beijing is poised to diminish.
Trump’s Middle East visit has spurred commitments from regional sovereign wealth funds, particularly Saudi Arabia’s Public Investment Fund (PIF), to bolster investments in the United States. This could potentially see a diversion of capital previously earmarked for China, eroding Beijing’s financial influence in the region. In August 2024, the PIF signed six memoranda of understanding with Chinese financial institutions, valued at $50 billion, to facilitate debt and equity capital flows. Trump’s agreements, however, could lead to a rechanneling of Middle Eastern funds toward U.S. markets.
Trump’s Riyadh speech makes the U.S. more appealing than China for Gulf countries that are wary of aggression and want peace. Trump signaled in his speech that the U.S. is not keen on interventionalism and adventurism in the Middle East and elsewhere, and instead wants to promote commerce and defend America’s interests. In contrast, the CCP has never renounced the use of force to achieve “reunification” with Taiwan, has become more aggressive towards China’s neighbors in recent years, and has positioned itself as the defender of a “multipolar” world order that it actually wants to dominate as the hegemon. Iran indicating that it is willing to sign a nuclear deal with the U.S. shortly after Trump’s speech suggests that the Gulf nations are taking seriously America’s changed role and vision with regard to the Middle East and the world.
Finally, a potential U.S.-Iran nuclear agreement could pave the way for regional stability, de-escalating Gaza conflicts and lifting Syrian sanctions, and unlocking significant economic growth prospects in the Middle East. Such stability may divert capital flows from China, diminishing enthusiasm for its Belt and Road Initiative, while reconstruction efforts in Gaza and Syria offer lucrative commercial prospects. Saudi Arabia, Qatar, and the UAE, with low debt-to-GDP ratios (27 percent, 42 percent, and 32.44 percent, respectively) compared to the U.S. (122 percent), EU (average 83 percent), and China (312 percent), boast fiscal flexibility to capitalize on these opportunities. Bolstered by youthful, abundant labor forces, these nations are primed to thrive in a stabilized region and have a reduced need to seek out Beijing for economic prospects.
